PE-to-PE activity still proving popular in 2016

Hispanic foods retailer Mesa Foods has changed private equity hands. Encore Consumer Capital, the company’s owner since 2013, announced on Tuesday the sale of the business to Teasdale Foods, a portfolio company of Snow Phipps—one of a handful of secondary buyouts executed during the closing weeks of 2Q.

On a larger timeline, the past seven years have shown a distinct increase in the frequency of SBOs. Global PE-to-PE deal volume rose from 425 to 988 between 2010 and 2015, according to the PitchBook Platform. Last year brought a particular leap, climbing from 769 deals in 2014 to 988 in 2015, an uptick of more than 28%. Whether you attribute it to an excess of dry powder leading investors to pursue different kinds of deals, an attractive lending environment or some other cause, it’s undeniable that SBOs are occurring more often than ever before.

Global SBO activity by year

Source: PitchBook Platform

Until this year, that is. With 367 SBOs logged in the PitchBook Platform, 2016 is on track to finish well behind 2015’s pace. But don’t anticipate figures falling off a cliff; instead, deal count may return to around or perhaps even above 2014 levels, with 2015 remaining (at least for now) an anomalous peak.

One noteworthy regional trend in the data: SBOs have been much more common across the Atlantic this year than in North America. So far in 2016, 48% of all SBO activity occurred in Europe, while just 45% was in the U.S. Accounting for buyouts of all kinds, a total of 51% of activity this year has been in the U.S. and a mere 41% in Europe.

As such, the two most active investors so far this year in global PE-to-PE deals both hail from Europe. The French firm Bpifrance leads the way with 10 SBOs already completed this year, and Norway’s Verdane Capital ranks second with eight.